International Trade
Because of the increasingly globalized nature of the economy, manufacturers, retailers and service providers have more options to locate sources of supply and labor where overall costs are lower than in their home markets. In industry today, parts and supplies frequently come from many different countries, such as the Boeing 787, with 65% of its components outsources to foreign companies (Hill 2011). Another example is flat-screen TVs, which have their components manufactured in Asia, assembled in Mexico then shipped to distributers in the United States. Vizio has a small office in California with less than 100 employees to handle sales and service, but with all of the design, manufacturing and assembly done overseas. Even though American companies originally developed this technology in the 1960s, they did not continue with it and forfeited this market to Asian countries (Hill 2011). This has happened time and again in American industry, which has been devastated by Asian imports since the 1970s. In the case of China, which has become the largest exporter among the developing nations, wage-costs and currency values have been held artificially low to stimulate exports, while the state subsidizes these export industries far more than in the United States. Economists who once believed in the comparative advantage theory of David Ricardo have changed their minds when it comes to the China trade and argue that its unfair advantages have cost the U.S. economy millions of manufacturing jobs, increased unemployment, lowered incomes and raised the costs of adjustment to the U.S. government.
American economists who once believed that trade with China would have only on minimal impact on manufacturing and blue-collar jobs in the U.S., have been changing their minds in recent years. For years they argued the benefits of the China trade would outweigh the costs, but now they realize that the "damage to the U.S. economy has been deeper" than they originally predicted. Those regions most exposed to Chinese exports have suffered...
Brock and Dobbelaere (2003) demonstrate that wage price competition from overseas reduces wages in the developed world, even when jobs are maintained. However, international trade based on comparative advantage should also create opportunities and indeed it does. The reallocation of resources to improve efficiency means that less manual labor is conducted in the West because on a comparative basis Western nations perform better at innovation, and at knowledge-intensive businesses in
International Trade and Comparative Advantage Because trade between nations is as ancient as mankind itself, there have been a number of theories advanced over the years to help account for why some countries seem to benefit more than others in the process. To this end, this paper provides an overview of trade theories according to Adam Smith and Ricardo to determine how free trade has adversely affected developing countries in general
For example, Shu-Acquaye (2007) cites the basic differences in the legal systems in various parts of the world as contributing to the different approaches to corporate governance. Likewise, Shu-Acquaye cites these differences and adds, "The American corporate governance system adheres to the idea of shareholder primacy. Because the United Kingdom, Austria, and Canada share a legal system based on English common law and equity principles, they are similar to
They are used to the existing state-based system of commercial regulation, and there are several reasons why they might wish to maintain it. The advantage of using this system is that the MNCs know the system well, and the system uses effective tools for managing and currently provides them with significant leverage. They have proved adept at using leverage: globalization has forced firms to raise efficiency and adopt cost-minimization
International Business Competitive strategy is the bedrock on which companies base business decisions to reach their targets and achieve profitability. Formulating and implementing strategies in international business is much more complicated and difficult task than doing so in home or familiar markets. Competitive strategy deals with the development of abilities by a firm to keep ahead of competitors in the fields in which it operates. Firms develop competitive edge in global
, 2003). Notwithstanding these similarities in the marketing function, there are some important differences that must also be considered. For example, even enormous countries in geographic and population terms that have relatively homogeneous populations may require more straightforward domestic marketing techniques and small city-states will require more elaborate international marketing techniques. For example, as Rao (2000) points out, "Given its strong tourism base and an open economy, Singapore has modern international
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